Correlation Between Publicis Groupe and Nexity

Can any of the company-specific risk be diversified away by investing in both Publicis Groupe and Nexity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Publicis Groupe and Nexity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Publicis Groupe SA and Nexity, you can compare the effects of market volatilities on Publicis Groupe and Nexity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Publicis Groupe with a short position of Nexity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Publicis Groupe and Nexity.

Diversification Opportunities for Publicis Groupe and Nexity

0.95

Correlation Coefficient

Publicis Groupe  Nexity

Almost no diversification

The 3 months correlation between Publicis and Nexity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Nexity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexity and Publicis Groupe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Publicis Groupe SA are associated (or correlated) with Nexity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexity has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and Nexity go up and down completely randomly.

Pair Corralation between Publicis Groupe and Nexity

Assuming the 90 days trading horizon Publicis Groupe SA is expected to generate 0.44 times more return on investment than Nexity. However, Publicis Groupe SA is 2.28 times less risky than Nexity. It trades about -0.13 of its potential returns per unit of risk. Nexity is currently generating about -0.09 per unit of risk. If you would invest  10,195  in Publicis Groupe SA on December 30, 2024 and sell it today you would lose (1,195) from holding Publicis Groupe SA or give up 11.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Publicis Groupe SA  vs.  Nexity

Publicis Groupe SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nexity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Publicis Groupe and Nexity

The main advantage of trading using opposite Publicis Groupe and Nexity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Publicis Groupe position performs unexpectedly, Nexity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nexity will offset losses from the drop in Nexity's long position.

The idea behind Publicis Groupe SA and Nexity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.